Enforcing Good Working Order

Earlier this week I posted a video on representations and warranties: what they are, which ones we see often, and why your buyers should care.

Today I want to focus on enforcing the most common one... the good working order clause.

If your buyer finds a chattel not working on closing, and the seller won't cooperate, enforcing the clause typically means small claims court.

So as a practical exercise, I read through a number of decisions to understand what successful plaintiffs have in common.

Here's what they prove and how they do it:

1. Contractual basis

First you need standing. The good working order clause has to exist in the agreement. Remember, it's not in an APS by default, it needs to be specifically included. And just as important, the clause has to survive closing. Without both, there's no legal basis for the claim.

The Seller represents and warrants that the chattels and fixtures as included in this Agreement of Purchase and Sale will be in good working order and free from all liens and encumbrances on completion. The parties agree that this warranty shall survive and not merge on the completion of this transaction, but apply only to the state of the property at completion of this transaction.

2. Breach

This is the hardest element to prove and where most cases are won or lost. You need to show the item was not in good working order at closing, not just that it's broken now.

The difference matters because the warranty only speaks to the state of the property at completion.

I ranked the type of evidence that seems to carry the most weight here:

• Professional reports — an HVAC technician, plumber, pool contractor, etc. who can not only confirm the defect exists but speak to how long it's been developing. "The furnace is broken" is far less useful than "this heat exchanger has been cracked for years." The backward-looking opinion is what ties the defect to the seller's time of ownership. Very valuable.
• Photo/video evidence — time stamped photos and videos of the defect taken at possession are some of the most straightforward evidence you can have. It's hard to argue against a video taken at 3:15 p.m. on closing day showing the dishwasher won't turn on.
• Timing of communication — the moment your client takes possession and finds a problem, it helps when it's on record. I've relied on email chains where a client took possession at 3:00 p.m. and I had a written record of the issue 37 minutes later. This works well in combination with photos and videos.
• Testimony — affidavits and in-person testimony still matter, but they're strongest when they're supported by the above. When it comes down to one party's word against another's, the more organized and credible account tends to win.

3. Damages

Lastly, you need to show what the breach actually cost. Invoices, repair estimates, replacement costs... whatever can document the loss in real numbers.

Getting these quickly after possession matters too. A repair estimate dated two days after closing reinforces the same timeline you're building with the rest of the evidence. This is usually the most straightforward element, but it still needs to be there to contextualize the claim.

Latest YouTube Video:
Representations and Warranties in Real Estate